New Tax Regulations In China Will Create More Transparent Tax System: Analysts
Hong Kong (PRWEB) February 25, 2008 — Zetland Financial Group reports new tax regulations ordered by China’s government will create greater transparency and stability in the mainland’s tax regime.
China’s implementation of new rules resulting in the same tax rate for domestic and foreign companies will mean greater predictability and transparency, Zetland Financial Group reports on its website.
Chinese and foreign firms in China are now levied the same corporate tax rate of 25 percent after the new Enterprise Income Tax Law and Implementation Rules took effect on Jan. 1.
The new laws, which were passed on March 16, 2007, will no longer give any preferential treatment to foreign invested enterprises over their domestically funded counterparts.
“I believe the new law and rules will provide all market players with a more transparent, stable and predictable tax system,” said Joseph Tse, tax manager partner at Deloitte Greater China.
“With the loss of most tax incentives, domestic enterprises and FIEs alike will need to develop strategies that optimize their domestic and global tax benefits, relying more on traditional tax planning tools,” he said.
Analysts said the banking sector will benefit most. “Less tax for the mainland banks could compensate losses from restriction on lending due to recent tightening measures,” said the head of China research at a European investment house.
Under the new regulations, firms registered before March 16 will either receive a five-year grace period where they will be subject to a gradually increasing tax rate, or they will be entitled to complete the period of tax exemption that they were promised.
The report says high-technology industries will be given preferential treatment if they are supported by the state and located in special economic zones. Companies owning intellectual property that are registered after Jan. 1 in these zones will be exempt from any corporate tax for the first two years.
The report is one of many offered each month by Zetland Financial Group on its comprehensive website. Zetland provides business and financial consultancy internationally and in the Asia region with an emphasis on operations in China, offering personal service and valuable advice with total confidentiality.
From its base in Hong Kong, the company is in a position to provide clients with the efficiencies and sophisticated infrastructure of one of the most dynamic international cities - also an integral part of the rapidly growing economy of China.